As reported in our November 9, 2015 blog post, the present STEM OPT rule which allows F-1 students with U.S. degrees in science, technology, engineering or mathematics (STEM) to extend their optional practical training (OPT) by 17 months was to expire on February 12, 2016, unless the U.S. Department of Homeland Security (DHS) could publish and promulgate a new rule.  The present STEM OPT extension rule had been vacated by the U.S. District Court for the District of Columbia in August 2015 for procedural deficiencies in its promulgation, but the court’s ruling was stayed until February 12, 2016, so DHS could publish a new rule for public comment and prevent hardship to the thousands of F-1 students employed in the U.S. on STEM OPT and the companies that employ those individuals. Our November 9, 2015 blog post detailed some of the highlights of DHS’ proposed STEM OPT extension rule which was published for comment in the Federal Register on October 19, 2015.  The DHS received an overwhelming 50,000 plus comments to the proposed rule and, a few days before the Christmas holiday, asked the court for a 90-day extension of the existing STEM OPT rule so it could address the comments and begin to train DHS officers on the intended changes to the STEM OPT program.  Following additional pleadings by DHS and Washington Alliance of Technology Workers (WashTech) — the plaintiff in the case that was before the U.S. District Court for the District of Columbia — the court, last Saturday, delayed its order terminating the STEM OPT rule as of February 12, 2016, and granted the DHS an additional 90 days to revise its proposed STEM OPT rule.  The court extended the sunset date of the STEM OPT extension rule to May 10, 2016, and warned DHS that no further extensions would be granted. As a result of this determination, those F-1 student employees with STEM OPT remain authorized to work in the U.S., at least through May 10, 2016.  However, WashTech’s counsel has indicated that an appeal of the decision to extend the sunset date by 90 days would be filed with the D.C. Circuit immediately. We will continue to keep you informed of further developments in this matter so you and your employees can plan accordingly.

As we reported in a blog post last month, although neither the federal nor state law expressly prohibits discrimination on the basis of gender identity or expression, Governor Cuomo bypassed the legislative process and urged the New York State Division of Human Rights to issue regulations that will interpret the state’s anti-discrimination prohibitions to cover transgender individuals.  Just this week, the New York State Division of Human Rights adopted those regulations.  The regulations, which became effective on Wednesday, make discrimination or harassment against transgender applicants and employees unlawful, and require employers to accommodate transgender individuals who have been diagnosed with a medical condition referred to as “gender dysphoria” – a medical condition related to an individual having a gender identity different from the sex assigned to him or her at birth. In addition, the New York City Commission on Human Rights recently issued a guidance document on what constitutes discrimination against transgender people under the New York City Human Rights Law.  The Commission’s guidance provides numerous examples of employer actions that violate the NYCHRL, including failure to use an individual’s preferred name, pronoun or title, denying transgender employees the use of restrooms consistent with their gender identity, and even enforcing dress codes that make differentiations based on sex or gender.  The Commission’s recent guidance also announces much more strict penalties for transgender discrimination.  Under the NYCHRL, civil penalties can range from $125,000 to $250,000 for violations that are deemed to be “willful, wanton or malicious.”  The Commission announced that, among other factors, it will consider the lack of an adequate discrimination policy as a factor in assessing penalties. Employers should review and revise their EEO and anti-harassment policies in light of these recent changes.  Employers should also consider taking steps to educate and train their employees regarding these new requirements.

On December 28, 2015, Governor Cuomo signed a bill repealing Civil Service Law § 75-b(2)(b).  This has a significant effect on the anti-retaliation provisions of New York’s “whistle blower” protection statute for public employees who report to a governmental body either (a) violations of a law, rule or regulation, or (b) something which an employee reasonably believes to be “improper governmental action." Civil Service Law § 75-b protects public employees who are whistle blowers against retaliation by public employers (which includes the State of New York, counties, cities, towns, villages, and school districts).  As originally enacted, § 75-b(2)(b) (now repealed) required that a public employee, in order to invoke the anti-retaliation protection, first “shall have made a good faith effort to provide the appointing authority or his or her designee the information to be disclosed and shall provide the appointing authority or designee a reasonable time to take appropriate action unless there is imminent and serious danger to public health or safety.” With the repeal, there now appears to be no requirement that the employee report the issue internally before taking it to another governmental body.  While no doubt well-intentioned, the repeal may very well empower disgruntled employees to pepper regulatory and criminal authorities with complaints of alleged misconduct. In addition to the fact that public employers should generally be aware of this change, public employers should also examine and review their existing whistle blower policies to determine if any revisions should be made.

In Whole Foods Market, Inc., the National Labor Relations Board, in a 2-1 decision, held that Whole Foods' rules prohibiting the recording of conversations in the workplace violated Section 8(a)(1) of the National Labor Relations Act.  The two rules that were found to be unlawful were nearly identical.  Both appeared in the company's General Information Guide, a guide that applied to all employees. The first rule prohibited the recording of company meetings without prior approval from store management, and the second rule prohibited all recording in the workplace without similar prior approval.  The stated purpose of both rules (as set forth in the Guide) was to encourage open conversation and dialogue, and to eliminate the chilling effect that may exist when someone is concerned a conversation is being secretly recorded. Contrary to the stated purpose of the rules (to encourage open and honest communication), the Board majority instead found that such rules would reasonably be interpreted by employees to prohibit them from engaging in protected Section 7 activity.  The Board majority reasoned that such rules would unlawfully prohibit employees from engaging in Section 7 activity such as (1) recording images of protected picketing, (2) documenting hazardous working conditions, or (3) documenting and publicizing various issues relating to terms and conditions of employment.  The Board majority rejected the employer’s (and the dissent’s) contention that the stated intent of the rules (to encourage open and honest communications in the workplace without fear of surreptitious recordings) constituted a valid overriding employer interest to justify the rules. So, it is clear that the current Board will likely find no-recording rules in the workplace to be a violation of the NLRA unless the employer can establish a valid overriding interest to justify such rules.  Considering the current pro-union makeup of the Board, establishing such an overriding interest will likely be difficult, and such rules will be aggressively scrutinized.  Nonetheless, certain narrowly tailored restrictions supported by valid business justifications may be upheld by the Board.  For example, a rule prohibiting the recording of meetings in which confidential information or trade secrets are discussed, or a rule prohibiting the recording of conversations involving private client or patient information, may be found to be lawful.  However, at this point, employers should be wary of imposing broad no-recording rules in the workplace. Employers may require employees to follow applicable state or federal laws regarding secret recordings.  The impact of an employer's ability to impose this restriction is limited in New York, where an individual may lawfully record a conversation as long as the individual doing the recording is a party to the conversation.  However, an employer's ability to impose this restriction would have a significant impact in states such as Massachusetts and California, where the law requires that all parties to a conversation must consent to the recording of the conversation. The Board's decision in the Whole Foods case may not necessarily be the last word on this issue, because the company has appealed the decision to the Second Circuit Court of Appeals, which may be more sympathetic to the valid business justification for the company's no-recording rules.  However, it may be worthwhile for employers to consider whether they currently have policies in their employee handbooks that prohibit recordings in the workplace, and if so, whether those policies should be revised.  Employers should consult with legal counsel to assess the potential valid business justifications for the policies and to review any recording laws that may be applicable to employees in particular locations.  Both the valid business justifications and any legal restrictions on recordings in the workplace should be expressly stated in the policies.

Human resource officers and managers are often asked to chair or sit on a retirement plan committee responsible for administrative tasks.  In this role, a committee member takes on fiduciary responsibilities to plan participants and beneficiaries, and can be held personally liable for fiduciary breaches under Federal law.  As legal counsel, we endeavor to manage this risk for our clients through guidance on good governance, indemnification protection, and the adoption of effective policies.  Effective management of employee benefit plans will meet this fiduciary duty to participants while at the same time improving results for employees and minimizing potential liability exposure of plan managers. We are sometimes asked to review a proposed investment policy statement or IPS related to a 401(k) or 403(b) retirement plan.  Although these plans are not required to have an IPS, we recommend having one as a guide for prudent plan administration.  Most plan service providers and record keepers will have a standard form or model available for use by the employer adopting the plan.  Models can be useful, but any model should not be adopted without discussion and agreement with its terms.  Because an IPS is a policy of the employer in its role as plan administrator, and not one of the outside record-keeper or financial consultant, it’s important for a plan committee to discuss and “own” its policies.  Furthermore, a carefully-designed policy will not create additional responsibilities for a plan committee or officer beyond those imposed by law. An effective IPS will describe the roles and duties of a plan committee, other responsible officers, or plan service providers.  It provides a framework and process for investment decisions as well as indemnification for employees who are charged with fiduciary duties.  In many cases, there may be a financial advisor or consultant who is engaged to carry out the policy in some capacity.  Once a policy has been discussed and adopted, it is an aid in running efficient committee meetings and in working effectively with outside service providers.  Adopting a well-crafted IPS is an important element of prudent plan administration. An IPS should not dictate how many investment choices will be available for participants or the asset categories to be covered by plan options.  Using factors described in the policy, a plan committee can handle the tasks of monitoring current options, assessing their potential for future performance, and making changes in a plan’s fund options.  By creating and following a disciplined investment policy, a plan committee greatly reduces its risk of fiduciary liability when investment markets become volatile. There is a downside in adopting an IPS and then ignoring it.  Our experience has been, however, that once discussed and adopted, an IPS brings better focus and engagement by committee members, more efficient meetings, and a higher level of fiduciary performance on behalf of plan participants.  We have developed model policies that, together with proposals from plan service providers, can form the basis for your own policy.

Under the heading of “better late than never,” the IRS has recognized that “some employers, insurers, and other providers of minimum essential [i.e., health] coverage need additional time to adapt and implement systems and procedures to gather, analyze, and report” the information required on Forms 1094-B, 1095-B, 1094-C, and 1095-C for the 2015 calendar year.  It has delayed the due dates for providing the required forms to both individuals and the IRS as follows:

• The due date for providing forms to individuals on 1095-B and 1095-C is extended from February 1, 2016 to March 31, 2016.
• The due date for filing with the IRS is extended from:
  • February 29, 2016 to May 31, 2016 if not filing electronically (for employers who filed fewer than 250 W-2s in the prior year), and
  • March 31, 2016 to June 30, 2016 if filing electronically.

Employers or other coverage providers who do not comply with the extended due dates are subject to penalties, which may be abated for reasonable cause based on facts and circumstances. Because of the delay, individuals who file tax returns based on other information from their employers about their offers of coverage for purpose of determining whether they are eligible for a premium tax credit for health insurance marketplace coverage will not be required to file amended tax returns once they receive their Forms 1095-C or any corrected 1095-C.

As we reported previously, the New York State Department of Labor (“NYSDOL”) proposed a series of new regulations earlier this year.  These proposals included new regulations raising the minimum wage and reducing the maximum available “tip credit” for certain workers in the hospitality industry, and new regulations implementing the recommendation of Governor Cuomo’s Fast Food Wage Board to raise the minimum wage for fast food workers to $15.00 per hour.  Today, both sets of regulations were formally adopted and published in the New York State Register. These new regulations are effective on December 31, 2015, and contain no changes from what NYSDOL originally proposed earlier this year. For more information about these regulations, readers can access our prior blog article.  Among other things, as of December 31, 2015, certain tipped workers who fall under New York’s Hospitality Industry Wage Order must be paid at least $7.50 per hour and may only receive a maximum “tip credit” of $1.50 per hour.  Also, as of this same date, covered fast food workers must be paid at least $9.75 per hour if they are employed outside of New York City or at least $10.50 per hour if they are employed inside of New York City.  These minimum wages for covered fast food workers are set to automatically increase annually, eventually reaching $15.00 per hour on December 31, 2018 in New York City and on July 1, 2021 in all other areas of New York. There may be legal challenges to these recently-adopted regulations, in particular the regulations impacting employers in the fast food industry.  We will continue to report any noteworthy developments here.

After several unsuccessful attempts to pass the Gender Expression Nondiscrimination Act, which would have extended the nondiscrimination protections in the New York Human Rights Law to transgender individuals, Governor Cuomo took the unprecedented step of directing the New York State Division of Human Rights to issue regulations that would protect transgender applicants and employees in New York. The proposed regulations, which were published in the New York State Register on November 4, 2015, make discrimination and harassment on the basis of gender identity or the status of being transgender a form of sex discrimination prohibited under state law.  The proposed regulations would also make “gender dysphoria” a protected disability under state law, prohibit harassment on the basis of one’s gender dysphoria, and obligate employers to provide accommodations to employees diagnosed with gender dysphoria.  The regulations define “gender dysphoria” as a “recognized medical condition related to an individual having a gender identity different from the sex assigned to him or her at birth.” The 45-day comment period recently ended, which clears the way for the Division of Human Rights to adopt the regulations.  However, it is anticipated that the Division will wait until early 2016 to begin enforcing the Human Rights Law with respect to transgender applicants and employees.  The anti-discrimination statute in New York City and several other city ordinances already extend protection to transgender individuals.  In addition, earlier this year, the Department of Justice and the EEOC began interpreting the sex discrimination prohibition in Title VII of the Civil Rights Act to cover discrimination against transgender individuals.  The Office of Federal Contract Compliance Programs also issued a final rule prohibiting federal contractors from discriminating against employees or applicants based on their sexual orientation or gender identity. A great deal of litigation is likely to occur in this area in the upcoming year, not only to challenge the application of the various federal and state laws to transgender individuals, but also to address complex and sensitive issues including how employers will need to handle issues of confidentiality, employee benefits, accommodations for restroom access, and other issues that might arise for employees transitioning from one gender to another.  Employers would be well-advised to begin to review their employee handbooks and other employment policies and practices to prepare for these expanded protections for transgender employees and applicants.

In the classic 1980's comedy "Say Anything," the iconic high school senior Lloyd Dobler articulates his career goals as follows: "I don't want to sell anything, buy anything, or process anything as a career.  I don't want to sell anything bought or processed, or buy anything sold or processed, or process anything sold, bought, or processed, or repair anything sold, bought, or processed.  You know, as a career, I don't want to do that." A cursory Google search reveals that this 25 year old quote still resonates with much affection.  But what may be deemed a charming lack of ambition from a teenaged movie character can be the death knell of a First Amendment case brought by a plaintiff who turns this quote into a veritable workplace mantra. Take for example the recent case of Alves v. Board of Regents of the University System of Georgia.  In Alves, five psychologists of the Georgia State University Counseling Center submitted a written memorandum to the Counseling Center's director and the director's supervisor, criticizing the director's leadership and management, which they claimed "created an unstable work environment" and prevented the staff from being effective in their work.  The memorandum set forth five areas of concern, including deficiencies in management, witness tampering, and selective treatment of staff based on race. A short time later, the director implemented a reduction in force affecting all the staff psychologists, all but one of whom were signatories to the memorandum, and outsourced their services at allegedly lower costs.  The five psychologists who had signed the memorandum filed a First Amendment retaliation suit, claiming that they were fired for the "speech" contained in the memorandum, which they contended was made by them as ordinary citizens on matters of public concern. The defendants moved for summary judgment dismissing the complaint, arguing that under the Supreme Court's decision in Garcetti v. Ceballos, the memorandum was written about matters of only personal interest pursuant to the plaintiffs' official duties as employees, rather than about matters of public concern.  The lower court agreed with the defendants and dismissed the complaint, which resulted in an appeal to the Eleventh Circuit Court of Appeals. On appeal, the five psychologists employed a Dobleresque view of their job responsibilities, arguing that raising ethical issues and protesting alleged supervisory incompetence were simply not within the ordinary ambit of their job duties.  In other words, according to the plaintiffs, their job was only to provide counseling services to students -- not to "process" or "repair" anything within the broader universe of their workplace.  The Eleventh Circuit disagreed and affirmed the dismissal of the plaintiffs' complaint.  The Court found that the plaintiffs' protests were in furtherance of their ability to perform their job responsibilities with the goal of ending perceived mismanagement.  The Court determined that these were matters of personal interest rather than public concern, and therefore, were not protected by the First Amendment. The long and short of Alves and the cases that follow similar reasoning is that while a public employee may say anything in a lawsuit to try to limit their true job responsibilities, lack of ambition, whether real or feigned, is rewarded with applause only in the movies.

Many employers now track employee attendance by using biometric scanners that require an employee to clock in and out by scanning a fingerprint or a palmprint.  Such scanners have largely replaced paper timesheets and have made managing employee attendance more accurate and efficient.  However, employees sometimes express privacy concerns when asked to provide such data.  Many employees are concerned about what an employer may do with the gathered information or whether the information could be hacked by an outside individual. Recently, an employee was awarded a judgment of $586,860 (including back pay, front pay, and compensatory damages) after his employer forced him to retire due to his refusal to use the biometric hand scanner that the company installed to track attendance.  The employee, who was an Evangelical Christian, had informed his employer that using the hand scanner violated his sincerely held religious beliefs because it could potentially be used to create an identifier for followers of the antichrist known as “The Mark of the Beast.”  While this is an extreme example, many employees have expressed fears that their biometric data may be improperly used in the future. New York employers should be aware that New York State has one of the few statutes that limits the collection of biometric data.  New York Labor Law Section 201-a prohibits employers from requiring the fingerprinting of employees as a condition of obtaining or continuing employment.  There are limited exceptions to this restriction.  For example, the New York State Department of Labor has taken the position that voluntary fingerprinting is permissible.  Additionally, Section 201-a does not apply to state or municipal employees, workers at medical institutions, many school employees, or to other employees who are subject to fingerprinting by law or regulation.  Aside from these exceptions, however, many New York employers may be limited to the use of hand scanners or the more expensive iris scanning equipment, rather than a device that requires an employee’s fingerprint. As an alternative to biometric scanners that require an employee’s fingerprint, some employers have installed devices that use a finger geometry “scan” rather than an actual “fingerprint.”  This technology scans a user’s finger and identifies an individual’s finger “geometry” by measuring its length, width, thickness, and surface area, and disregards surface details, such as fingerprints, lines, and scars.  Those measurements are often converted into a mathematical algorithm that are then stored in the attendance scanners.  Because a fingerprint is not taken, Section 201-a is not implicated.  Once employees understand that their actual fingerprints are not being taken or kept by their employers, their privacy concerns generally dissipate. In addition to potential Section 201-a issues, employers should also be aware that they may have a duty to bargain with a union before requiring the use of such biometric devices pursuant to the National Labor Relations Act or the Taylor Law. Employers who are considering implementing a biometric scanner system to track attendance should:  (1) communicate with employees prior to introducing the biometric system, so that all employees will understand exactly how the technology is used; and (2) distribute a clear employer policy.  Often, employee privacy concerns are based on misinformation that can be alleviated by taking these two simple steps.

As we have previously reported on this blog, and as most of you are well aware, the U.S. Department of Labor has published its highly-anticipated proposed revisions to the “white collar” exemptions under the Fair Labor Standards Act (“FLSA”).  The proposed rule would increase the required salary level for exempt employees to a projected $50,440 per year in 2016 and establish a procedure for automatically updating the minimum salary levels on an annual basis going forward without further rulemaking.  The proposed rule also significantly increases the salary threshold to qualify for the “highly compensated employee” exemption to the annualized value of the 90th percentile of weekly earnings of full-time salaried workers ($122,148 annually).  According to the USDOL, nearly 5 million employees currently classified as exempt will immediately become eligible for overtime pay should the proposed rule be adopted as the final rule. Current best estimates are that we could see the final rule published next year.  In the meantime, there are steps employers can take now to start preparing for compliance, beginning with identifying those current exempt positions with salaries that would fall below the Department’s proposed $50,440 per year (or $970 per week) threshold or the increased salary threshold for highly compensated employees.  These employees will either need to receive a bump in salary to put them over the minimum threshold or be reclassified as non-exempt.  For those likely to be reclassified, employers should start trying to estimate future compensation costs by looking at how many hours per week these employees are currently working. Employers should also start thinking about whether they will need to hire additional full-time, part-time or seasonal employees or whether they will need to compensate newly reclassified employees at a lower hourly rate (as compared to their current weekly salary divided by 40) to offset the potential increase in overtime costs.  In determining hourly rates for newly reclassified employees, keep in mind that the minimum wage in New York increases to $9.00 on December 31, 2015.  In the Hospitality Industry, tipped workers and fast food workers in New York may also be in line for wage rate increases on December 31, 2015, pursuant to proposed regulations issued by the New York State Department of Labor. Finally, employers should start thinking about how these changes will be communicated to their employees.  An effective communications strategy will be an important part of managing the uncertainty and anxiety surrounding the potential reclassification of an unprecedented number of positions in the workplace.

Attendance point systems undoubtedly have appeal.  These policies -- often referred to as "no fault attendance policies" because they assign points to absences regardless of the cause -- take the subjectivity out of attendance-related corrective action.  However,  to be legally compliant, an attendance point system must make allowances for legally protected absences. You may be thinking -- "how could this be discrimination?  We're treating disabled employees the same as all other employees."  Well, the ADA requires you to not only treat qualified individuals with disabilities the same as you would nondisabled employees, it also requires that you provide reasonable accommodations -- modifications or adjustments to the way things usually are done that enable a qualified individual with a disability to enjoy an equal employment opportunity.  Among the possible accommodations envisioned by the EEOC?  Modifying or changing policies. Not surprisingly, the EEOC now has employers with attendance point systems in its sights.  In fact, the EEOC has brought legal action against a number of employers who maintain attendance point systems that fail to except out legally protected absences. By way of example, last week, the EEOC announced a $1.7 million settlement with Pactiv LLC, an Illinois-based employer.  According to the EEOC, Pactiv maintained policies under which attendance points were issued for medical-related absences.  In addition to paying $1.7 million, Pactiv also agreed to revise and distribute a new attendance policy that will not assess points for disability-related absences.  As noted by the EEOC District Director -- "Employers need to get this message:  Inflexible, strictly enforced leave policies can violate federal law. . . .  As an employer, make sure you have exceptions for people with disabilities and assess each situation individually." The takeaways?

• Review your attendance policy to ensure it does not provide for the assignment of points (or corrective action) when an absence is legally protected.  If it does, work with labor and employment counsel to revise your policy to bring it into compliance.
• Educate supervisors and others involved in the administration of your attendance policy.